From the Regulators

Former issues of false signatures and firm discipline resolved

By James Langton |

 

By stepping up enforcement against reps that falsify client signatures, and ramping up disciplinary action against dealers for supervisory failures, the Mutual Fund Dealers Association of Canada (MFDA) has earned a clean bill of health from the provincial regulators.

The Canadian Securities Administrators (CSA) on Friday published its latest annual oversight review of the MFDA, which details the provincial regulators' assessment of how well the self-regulatory organization is carrying out its work overseeing the fund dealer business. Overall, the CSA found very little to complain about.

Most importantly, the review notes that the MFDA has successfully addressed two critical issues that were flagged in the previous oversight review in 2015. The CSA had taken issue with the MFDA over the issue of reps falsifying client signatures, as well as disciplining firms. In today's review, the CSA indicates that it found that the MFDA has resolved the issues raised in the 2015 review.

In particular, the current review notes that the MFDA launched almost double the number of enforcement cases involving allegations of signature falsification, increased the penalties for these violations, and published guidance for firms on supervising, investigating, and disciplining this activity.

The current review also reports that the MFDA opened more than twice the number of cases against dealers for alleged supervisory violations. The CSA also reports that the MFDA bolstered the ability of its enforcement staff to investigate supervisory issues.

In today's report, the CSA says that it expects the MFDA to continue to pursue enforcement for signature falsification and supervisory violations.

With the major issues from the last oversight review resolved, the CSA didn't identify any new high priority issues in its latest review. It identified one "medium priority" issue in the MFDA's financial compliance department, and a "low priority" issue in the enforcement department. It didn't find any shortcomings in the SRO's policy department.

This latest review involved six of the provincial regulators — Ontario, Alberta, British Columbia, Saskatchewan, Manitoba and Nova Scotia — and it covers the period from Aug. 1, 2015 to Jan. 31, 2017.

Read: BCSC chides MFDA for minimal explanation on sanctions

 

Photo copyright: 3ddock/123RF